Wealthsimple RESP Review 2021

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by Enoch Omololu

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A Wealthsimple RESP account can help you save towards your kid’s post-secondary education. Not only that, but you can also receive free government grants, enjoy a hand-free investment strategy, and save on fees.

This Wealthsimple RESP review covers how to open an account, the fees, performance, promotions, and alternative RESP providers in Canada.

What is a Wealthsimple RESP Account?

A Wealthsimple RESP is a government-registered account that lets you save and invest towards your kid’s future education.

Similar to a Wealthsimple TFSA, or RRSP account, this RESP offers tax advantages.

Simply put, you don’t pay taxes on the income earned in an RESP until your child begins to withdraw from it when they start post-secondary school. Because they will likely be in a low tax bracket at the time, the taxes they pay are little to none.

Parents can contribute up to a lifetime maximum of $50,000 in each child’s RESP account.

To encourage RESP contributions, the government matches 20% of your annual contributions by up to $500 (assuming you contribute $2,500 or more per year).

This government match is referred to as the Canada Education Savings Grant (CESG), and each of your kids can get up to $7,200 in total (free money!).

Depending on your family’s income situation, you may also qualify for other educational grants including the:

  • Additional Canada Education Savings Grant (A-CESG)
  • Canada Learning Bond (CLB), and
  • British Columbia Training and Education Savings Grant (BCTESG).

Wealthsimple automatically processes the applicable grants on your behalf.

Open a Wealthsimple RESP account and get a $75 bonus.

Wealthsimple RESP Account Types

Wealthsimple offers two main types of RESP accounts, including:

Individual RESP: This RESP account can be opened for one child (i.e. the beneficiary). If you have multiple kids, you can choose to either open an individual RESP for each one or open one family RESP for everyone.

Family RESP: Several beneficiaries can be added to a family RESP as long as they are all siblings. The maximum RESP contribution limit and grants are applicable per beneficiary, so for a family RESP, simply multiply the limit by the number of beneficiaries.

For example, if your family RESP is for three kids, you can contribute up to a maximum of $150,000 to the account without penalty. You can also get a maximum of $21,600 in CESG grants ($7,200 x 3).

How To Open a Wealthsimple RESP

Wealthsimple RESPs can easily be opened online. Click here to get started.

You will need to provide your Social Insurance Number and that of your kid(s). Their name(s) and date(s) of birth, are also required.

Anyone related to a child can open an individual RESP account on their behalf. This includes grandparents, uncles, aunts, and family friends.

For a family RESP, the subscriber must be a blood relative of the child.

Wealthsimple RESP benefits include:

Low cost: The 0.50% management fee and ETF costs are a lot less than you could pay for a comparable mutual fund which can cost up to 1.98%.

Convenience: Easily open your account online within 5 minutes. You can log into your account using a computer or phone to see what’s going on at any time.

Time-tested investment strategy: Wealthsimple uses a passive investment approach that’s been shown to do better over time. It also uses “Novel Prize winning strategies” to maximize returns while decreasing risk.

Automatic rebalancing: You don’t need to worry about asset allocations as they take care of that. New contributions are automatically invested on your behalf.

wealthsimple resp review

Wealthsimple RESP Portfolios and Performance

Wealthsimple offers multiple portfolios to suit your investment objectives, risk tolerance, and investment time frame.

The most popular ones are:

  • Conservative portfolio (35% stocks/65% fixed income)
  • Balanced portfolio (50% stocks/50% fixed income)
  • Growth portfolio (75-90% stocks/10-25% fixed income)

Here’s how these portfolios have performed on an annualized basis (as of August 31, 2021):

Portfolio1 year3 years5 yearsSince Inception
Conservative2.70%5.16%4.27%3.93%
Balanced6.39%6.38%5.48%5.05%
Growth15.95%8.70%3.90%7.83%

The inception date for the funds is August 20, 2014. And, the growth portfolio assumes an 80% equity asset allocation.

While it is a good strategy to look back at how a fund has performed historically, you should note that future returns are never guaranteed.

The Exchange-Traded Funds (ETFs) in your RESP may include any of the following (depending on your risk profile):

  • Vanguard Total Stock Market (VTI)
  • iShares MSCI Min Vol Global ETF (ACWV)
  • iShares Core MSCI EAFE USD (IEFA)
  • iShares Core S&P/TSX Capped Composite Index (XIC)
  • Vanguard US Total Market ETF (VUS)
  • BMO Long Federal Bond Index ETF (ZFL)
  • iShares Core Canadian Short Term Corporate Bond Index ETF (XSH)
  • SPDR Gold MiniShares Trust (GLDM)
  • iShares MSCI Min Vol Emerging Market Fund (EEMV)

If you prefer socially responsible investments or Halal portfolios, Wealthsimple offers these as well.

Lastly, high-interest savings ETFs are also available if you want to maximize your risk and avoid losses.

Wealthsimple RESP Fees

How much does it cost to invest in your Wealthsimple RESP account? The fees you pay comprise of a management fee paid to Wealthsimple, and inbuilt ETF fees paid to ETF providers.

Wealthsimple management fee: 0.50% per year when your account is below $100,000, and 0.40% when your portfolio exceeds $100,000.

ETF MERs: An average annual fee of 0.20% is paid to ETF providers.

When transactions involving assets denominated in foreign currencies occur in your account, a 0.20% FX fee applies.

Wealthsimple RESP Transfer

You can easily transfer your RESP account from other financial institutions to Wealthsimple.

They cover your transfer fees if the account value is more than $5,000.

If you choose to transfer out your Wealthsimple RESP to another bank, there is no transfer fee.

Wealthsimple RESP Promo

Readers of Savvy New Canadians get a $75 bonus when they open an account and fund it with $500 or more.

Take advantage of the RESP promotional offer here.

Here are some other Wealthsimple promotions you may be interested in:

Is Wealthsimple RESP Safe?

Wealthsimple’s custodial broker, Canadian Share Owner Investment Inc., is a member of the Investment Industry Regulatory Organization of Canada (IIROC).

It is also a member of the Canadian Investor Protection Fund (CIPF) which protects your account by up to $1 million should the firm become bankrupt.

In summary, Wealthsimple RESP accounts are safe.

Does that mean you can’t lose money in your RESP? No. depending on the performance of the stock markets, your investments may increase or decrease in value.

Wealthsimple vs. Questrade RESP

Questrade also offers RESP plans via its self-directed and managed investing platform (Questwealth Portfolios).

The management fees on Questwealth Portfolios are:

  • $1,000 – $100,000: 0.25%
  • >$100,000: 0.20%

In addition to this, you also pay ETF fees ranging from 0.17% – 0.22%, and a 100-basis points fee for U.S. dollar-denominated ETF trades in your account.

Like Wealthsimple RESPs, Questrade RESP earns tax-deferred growth and government grants are automatically deposited.

Readers of Savvy New Canadians can invest up to $10,000 free for 1 year with Questwealth Portfolios.

Wealthsimple vs. Justwealth RESP

Justwealth is a Canadian robo-advisor that offers Education Target Date Portfolios.

This is an RESP plan that tracks your kid’s age and matures when they are about to start post-secondary education.

The fee for Justwealth RESPs are:

  • 0.50%: First $500,000 investment assets
  • 0.40%: Assets over $500,000

In addition, you pay 0.20% in ETF fees. Note that the minimum fee for Justwealth RESP accounts is $2.50/month.

When your initial investment is $5,000 or more, you get a $50 bonus.

Wealthsimple RESP FAQs

Does Wealthsimple offer RESP accounts?

Yes, you can open an RESP account through Wealthsimple Invest. RESPs are not yet offered on Wealthsimple Trade.

Can I transfer my RESP to Wealthsimple?

Yes, you can transfer an existing RESP account to Wealthsimple. They cover the transfer fees up to $150 if your account value is over $5,000.

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Author

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Enoch Omololu

Enoch Omololu is a personal finance expert and a veterinarian. He has a master’s degree in Finance and Investment Management from the University of Aberdeen Business School (Scotland) and has completed several courses and certificates in finance, including the Canadian Securities Course. He also has an MSc. in Agricultural Economics from the University of Manitoba and a Doctor of Veterinary Medicine degree from the University of Ibadan. Enoch has a passion for helping others win with their personal finances and has been writing about money matters for over a decade. His writing has been featured or quoted in The Globe and Mail, Winnipeg Free Press, Wealthsimple, Financial Post, Toronto Star, Credit Canada, MSN Money, National Post, CIBC, and many other personal finance publications.

His top investment tools include Wealthsimple and Questrade. He earns cash back on purchases using KOHO, monitors his credit score for free using Borrowell, and earns interest on savings through EQ Bank.

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